Wells Taking $1.4B Hit, Ending Certain HEL Biz

Wells Fargo & Co., San Francisco, has announced that it will take a $1.4 billion special provision in the fourth quarter for higher losses it now expects in certain indirect channels and that it will "further tighten" its home equity lending standards by no longer accepting business through those channels.The company said it will stop originating home equity loans through wholesalers in which the combined loan-to-value ratio of the first and second mortgages is 90% or higher, or where the second mortgage is not behind a Wells Fargo first mortgage. Wells Fargo also reiterated that it will no longer acquire home equity loans through correspondent relationships, and that $11.9 billion in loan portfolios already acquired through such channels will be placed in liquidating status. The company said the $1.4 billion special provision for the liquidating portfolio reflects higher expected losses stemming from further deterioration in the housing market outlook. "Given today's uniquely challenging environment, we believe that sharpening our focus on our better-performing and relationship-based home equity loans is in the best long-term interest of our company," said John Stumpf, Wells Fargo's president and chief executive. Wells Fargo can be found online at http://www.wellsfargo.com.